Running a business comes with risks. Accidents, property damage, and legal claims can happen at any time, even when you’ve done nothing wrong. That’s why liability insurance is so important.
At its core, liability insurance is triggered when a claim of negligence is made against you or your business. Even if you did nothing wrong, defending yourself in court can be very expensive. Liability insurance for businesses helps cover both the costs of being found negligent and the significant expenses involved in defending a claim.
Liability insurance protects your business if someone says you caused them financial loss, injury, or property damage. It covers both any compensation you might owe and the legal costs of defending yourself.
This coverage is essential because defending a claim, even if you did nothing wrong, can cost tens or hundreds of thousands of dollars. Liability insurance makes sure you don’t have to pay these costs yourself.
What does Liability Insurance cover?
Liability insurance is meant to protect you from:
Claims of negligence – if someone alleges your actions (or failure to act) caused them financial loss, injury, or property damage.
Legal defence costs – including lawyer’s fees, court filing costs, expert witnesses, and settlement negotiations.
Damages or compensation – if you are found liable.
This applies to a wide range of scenarios, from a customer slipping on your premises to damage caused to someone else’s property while on a job site.
What is the trigger? Negligence
The most common trigger for liability claims is an allegation of negligence. Negligence doesn’t mean you intended to cause harm, it could simply mean someone believes you failed to take “reasonable care.”
For example, a cafe owner might be sued if a customer slips on a wet floor and becomes injured. Another scenario could be a tradesperson being sued if their work is alleged to have caused property damage.
How does it protect your business?
You don’t need to lose a case to lose money. Even if you haven’t been negligent, defending yourself in court can be extremely expensive. Lawyers’ fees, expert reports, and court appearances can quickly add up to tens or hundreds of thousands of dollars.
Liability insurance covers these defence costs, so your business can keep running while the case is ongoing. Without it, you might have to pay out of pocket, which could be a financial blow many businesses can’t handle.
Do you need liability insurance? A broker would know
Liability insurance is not just protection for when mistakes happen. It’s protection against the rising costs of legal disputes and claims, even when you’ve done everything right.
Understanding the level of protection you need can be complex, which is why speaking with an experienced broker can make all the difference. And whether you have questions about your current cover, need guidance on policy options, or want to explore a quote, our team is here to help.
Contact our team at he***@******om.au to discuss your options or request a free quote. Let’s work together to secure your business and keep it thriving.
If you own commercial property of any size or type, then you should consider commercial property insurance. We’re talking anything from an office building to an industrial warehouse, from a cold storage facility to a retail space, and beyond.
If you have financed the purchase, renovation, or fitout of your property then you may actually be required to have property insurance to secure your loan. This can also extend to finance for your contents, stock, or machinery.
Likewise, other contracts you have relating to your property or contents will often contain conditions regarding property insurance, so make sure you have a good look over all of your paperwork. Fortunately, this is something an experienced broker can help you with.
Why do you need commercial property insurance?
You may have just found out that you need to consider property cover, let’s look at why it is a critical part of a sound risk management strategy for any commercial property owner.
You obviously purchased (or are purchasing) this property for a reason, and at the end of the day that reason is to generate future income.
Ask yourself the question – if your property is damaged beyond use, could you afford to repair or replace it without insurance? Or even, would you be able to continue to produce income from your business if the worst did happen?
If you answered no, then you need commercial property insurance to protect your business from these situations.
Commercial property insurance is designed to cover you as an owner, and protect you against exposure to the risks of owning property. That said, not every property policy will suit your unique needs, a qualified broker can assist you in finding the best insurance that covers your needs.
What does commercial property insurance cover?
In general, commercial property insurance covers your property and income for damage arising from tangible events. These can include storms, fire, floods, theft, vandalism and more. There are often optional sections of cover you may wish to add on, such as machinery breakdown, electronic equipment, and general property/tools of trade.
There are two main types of commercial property policies: business pack insurance and industrial special risk (ISR). The most notable difference between the two is that an ISR policy covers your property against damage unless an exclusion is specifically made, whereas a business pack only covers defined events, for example, fire or theft.
An ISR policy may sound preferable, however they are usually only available for property with a combined asset value of over $10 million (some insurers will occasionally consider $5 million).
A broker can help you determine which kind of policy is appropriate for your assets and risks and even tailor cover to fit your situation more effectively.
How much does commercial property insurance cost?
As with all insurance, there are a number of factors that will affect the price of your premium. The average cost of commercial property insurance changes based numerous risk factors considered by insurers. These are all worth keeping in mind when purchasing or making changes to your premises.
The location of your property
The construction of your buildings
The security of your premises
The fitout of your property
The stock held on your property
The equipment held on your property
The size of your property
The age of your buildings
The business activities undertaken at your premises
For more information on how these considerations affect your premiums, and what you can do to avoid higher costs, speak to an experienced broker.
What should I consider when buying commercial property insurance?
Any insurance policy will only work effectively when it is suited to the specific circumstances it covers. The most important things to consider are: your property’s unique risks and whether the policy covers those, and whether the limit of the policy would be enough to rebuild the premises and your business if you suffered a total loss.
An off-the-shelf commercial property policy is likely to have exclusions that may make it inadequate for your needs, it may also be missing important additions relevant to your unique situation. A full-coverage policy is another option, but it will cost you more.
Price is obviously an important consideration for any business, though be warned that the cheapest policy rarely provides the best coverage. The excess you set will also impact your premiums, but it should be a realistic amount you can afford if the worst does occur.
On that note, underinsurance is becoming a prevalent concern in today’s market. Having a replacement cost valuation completed will help you determine the amount you need to insure your property for. Also, stay vigilant with property market changes and keep your policy up to date if you make any alterations or additions to your premises or if tenancies change.
At the end of the day, the best insurance for commercial property and how much it costs will come down to your individual space and your business’s specific needs. Fortunately, a qualified insurance broker can assist you in determining those.
What should I watch out for with commercial property insurance?
Make sure you gather as much detail about your property and its construction as possible, as insurers will expect full disclosure of anything that is a concern. This could be something common like asbestos, or something less obvious like a specific brand of cladding or machinery that has a higher risk factor.
Remember that commercial property insurance is separate to liability insurance, while there may be some overlap, it is good practice to have both types of cover to protect your business.
A solid piece of general advice is to review all documents as soon as you get them, you should also be provided a certificate of currency that stipulates your cover limits. Continue to revisit them regularly, particularly if you make a change to the building or tenants.
Finally, revisiting the issue of underinsurance, if you are found to have failed to insure your property for a reasonable value you could be held accountable for a percentage of the repair or replacement costs in the event of a loss. Using a qualified insurance valuation expert to make sure your property is insured for an appropriate amount can protect you against this risk.
Where should I go from here?
If you have determined that you may need commercial property insurance, having a broker do the heavy lifting can be a good assurance, and help make the process easier and more efficient. There are a lot of policy wordings to read after all.
At East West Insurance Brokers our team has several decades of combined experience in commercial property insurance, and we are here to assist you through the process of getting your business appropriately covered, and keeping it that way.
From the initial identification of your unique risks, to customising a policy to suit you and your business, you can trust our friendly and knowledgeable insurance advisors to aid you on your journey.
Get in touch today for a commercial property insurance quote tailored to suit you.
